DCS Provides Supplemental Disclosure Regarding Share Restructuring

Executive Summary

• Direct Communication Solutions, Inc. is restructuring its share capital by redesignating existing common shares as Class A and creating a new Class B class (up to 500 million shares).
• Founder Mike Yao Zhou will receive a one‑time right to convert his Class A shares into Class B shares that will carry enhanced voting rights (20 votes per share) once the company completes a minimum US$10 million financing and lists on NYSE American or NASDAQ (“Sunrise Conditions”).
• The restructuring requires approval by disinterested shareholders and the Canadian Securities Exchange and is intended to stabilize the shareholder base, facilitate the planned U.S. senior‑exchange listing, and support access to capital.

Key Details

• Restructuring Mechanics – Existing common shares become Class A (1 vote each). New Class B shares are created with a maximum authorized amount of 500 million; initially 1 vote per share, increasing to 20 votes per share after Sunrise Conditions are met.
• Zhou’s Holdings – Zhou currently holds 529,142 common shares (≈21.27% of outstanding shares). He will be granted the right to convert any or all of his Class A shares into Class B shares.
• Sunrise Conditions – Completion of a minimum US$10 million financing and successful listing of Class A shares on NYSE American or NASDAQ. Upon satisfaction, each Class B share carries 20 votes; economic interest remains unchanged.
• Shareholder Approval – The restructuring will be submitted to a special resolution of disinterested shareholders; Zhou will abstain from voting. CSE approval is also required before filing Articles of Amendment in Delaware.
• Purpose & Business Rationale –
• Provide a stabilized, controllable shareholder base for underwriters supporting the US$10 million financing.
• Enable the company’s planned senior U.S. exchange listing, improving capital access, liquidity, and market depth.
• Allow Zhou to assume an expanded strategic oversight role as board member while preserving minority shareholders’ economic interests.
• Impact on Operations – No direct operational changes are expected; the restructuring is purely a governance and financing facilitation measure.
• Regulatory Compliance – The transaction is a related‑party transaction under NI MI 61‑101. DCSI relies on an exemption from formal valuation because its securities are not listed on senior markets. Minority shareholder approval will be obtained as required.
• Board Rationale – Board concluded that the benefits (capital‑raising ability, liquidity, alignment with U.S. market expectations) outweigh potential drawbacks of a multiple‑voting structure, which only becomes effective after financing and listing conditions are satisfied.

Notable Quotes

(No direct quotes were provided in the release.)